Don't Know What To Do

Celebrity_2

Hi

I owe approx £32k and have roughly 12 years left and have been paying 4.85% £306 per month on my mortgage. This rate will now drop to 1.25% I have some savings which only netted me £50 interest - 2.78%
I was thinking of over paying by £70 - £100 a month and possibly paying £20k off the mortgage as a one off lump payment, however I have no pension. I do want to pay it off as quickly and cheaply as possible.
Should I make overpayments and keep the savings, I know I am getting more interest on them than the interest rate on the mortgage will be although in time it will go up because it is on a tracker now. Or should I pay a large proportion off? I want to make the most of this opportunity and make the right decision.

Thank you.

G_M

Since your savings are paid gross (it's an ISA) you are earning more on them than you are currently paying on the mortgage, so keep the savings. If / when your mortgage rate rises, then use the savings to pay off a lump sum of the mortgage.

supercat92

I would pay it off

Thrugelmir

Start a pension scheme immediately even its only a small monthly contribution intially.

If you can add to your savings at the current rate of interest do so. As they are earning more than you are paying on the mortgage.

Celebrity_2

If I make over payments plus a lump sum then I'd pay it off in 2 years which is sooo attractive compared to the current 12, it's so tempting. I know I am doing it completely the wrong way around and should have paid a lump off when I was on 4.85% !!!

Pension scheme, well I am 37, never really looked into it, you need your money now to pay the mortgage off and don't really consider old age. I think it is possibly too late for me now, I have lost 20 years of not paying in anyway.

I can't add to these particular savings as it's an ISA and I have put in my allowance for this year.

Thank you all for your advice and replies.

G_M

37 is not too late to start a pension scheme, but every year that passes makes it less worthwhile as the fund has less time to grow.

getmore4less

A pension is just a special wrapper on savings, what you realy need to consider is retirement planning.

In a lot of cases it is not worth bothering since the savings just replace benifits.